Foreign Market Entry Strategies Essay

When an organization has make a decision to enter an oversea market, there be a variety of options open to it. These options vary with cost, risk and the degree of control which fag end be exercised over them. The simplest form of entry strategy is exportationing utilise either a direct or indirect method much(prenominal) as an agent, in the case of the former, or counter bargain, in the case of the latter. to a greater extent complex forms include distant direct investments which may involve vocalise ventures, or export processing zones. Having decided on the form of export strategy, decisions have to be made on the specific channels.Many unpolished products of a raw or commodity nature use agents, distributors or involve Government, whereas processed materials, whilst not excluding these, rely more heavily on more sophisticated forms of access. These are discussed in this paper. The three main shipway are by direct or indirect export or production in a foreign country. expo rtation Exporting is the virtually traditional and well established form of operating in foreign markets. Exporting can be defined as the marketing of goods produced in one country into another.Whilst no direct manuf get alonguring is required in an abroad country, significant investments in marketing are required. The tendency may be not to obtain as much detailed marketing teaching as compared to manufacturing in marketing country however, this does not negate the subscribe to for a detailed marketing strategy. Here the manufacturing is home based thus, it is tiny risky than overseas based. similarly giving an opportunity to learn overseas markets before investing in bricks and mortar, it also reduces the potential risks of operating overseas.Exporting methods include direct or indirect export. In direct trade the organization may use an agent, distributor, or overseas subsidiary, or act via a Government agency. The disadvantage is mainly that one can be at the mercy of ov erseas agents and so the lack of control has to be weighed against the advantages. For example, in the exporting of African horticultural products, the agents and Dutch flower auctions are in a position to dictate to producers.According to Collett3 (1991) exporting requires a partnership between exporter, importer, government and transport. Without these four coordinating activities the risk of trouble is increased. Contracts between buyer and seller are a must. Forwarders and agents can get a vital role in the logistics procedures such as interlocking air space and arranging documentation. Foreign direct investment Besides exporting, other market entry strategies include licensing, joint ventures, contract manufacture, will power and participation in export processing zones or free trade zones.Licensing Licensing is defined as the method of foreign operation whereby a potent in one country agrees to permit a company in another country to use the manufacturing, processing, trad emark, know-how or some other skill provided by the licensor. It is quite similar to the franchise operation. Coca Cola is an smooth example of licensing. In Zimbabwe, United Bottlers have the licence to make Coke. Licensing involves little expense and involvement. The only cost is signing the agreement and policing its implementation.